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ELCDismissed· [2018] KEELC 4410 (KLR)

Bantu Africa Resort Limited v I & M Bank Limited & another [2018] KEELC 4410 (KLR)

Environment and Land Court
19 February 2018
LWL N Waithaka
2,498 words in judgment
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The bottom line

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A Kenyan court allowed I & M Bank to proceed with selling charged land, ruling borrowers cannot claim irreparable loss when property they pledged as loan security is sold.

What this practically means

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Executive summary

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Bantu Africa Limited Resort, the plaintiff/applicant, filed a plaint dated 26th September 2017 together with a notice of motion seeking temporary injunctions to restrain I & M Bank Limited and Garam Investment Auctioneers from advertising for sale, alienating or disposing of Title No. Ruguru/Gachika/1764, in alternative relief seeking extension of time to redeem or suspension of the power of sale under Sections 90 and 104(2) of the Land Act. The applicant, which had borrowed Kshs. 95,000,000 secured by a charge over the suit property, alleged non-compliance with the statutory notice requirements under Sections 90, 96 and 97 of the Land Act and unconscionable interest rates clogging its equity of redemption. The 1st respondent, through the affidavit of its debt recovery manager Musa Ng'ang'a Dumbuya, produced the statutory notices, delivery book, notification of sale, auctioneer's certificate and a valuation report, asserting full statutory compliance and alleging material non-disclosure by the applicant. Applying the Giella v Cassman Brown principles through the decision of Ouko J in Patrick Karimi Wairagu, L N Waithaka J held that the applicant, having offered the property as security, could not claim irreparable loss; any loss was compensable by damages following Nyanza Fish Processors v Barclays Bank. The court found the applicant in breach of its obligations, the respondents compliant with the applicable law, and the balance of convenience favouring the bank whose power of sale had crystallised. The application was dismissed with costs to the respondents on 19th February 2018.

Key legal issues

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01

Irreparable loss where the suit property is charged security

Holding

Loss from sale of a charged property is compensable by damages; no irreparable injury arises

Reasoning

Applying Nyanza Fish Processors v Barclays Bank, the court held that a chargor who offered the property as security cannot contend its sale causes irreparable loss, since such argument would defeat the very object for which the security was obtained. Any loss is financial and quantifiable, and a bank respondent is capable of satisfying damages.

p. 5
02

Prima facie case and compliance with statutory notices

Holding

The applicant was in breach and the respondents complied with the Land Act before exercising the power of sale; no prima facie case established

Reasoning

The affidavit evidence showed the applicant was in breach of its obligations and had acknowledged arrears in correspondence. The respondents annexed the statutory demand notice, notification of sale, section 15(c) auctioneers certificate and a valuation report, contradicting the applicant's claim of non-compliance. The court found no merit in the alleged non-compliance.

p. 5
03

Balance of convenience

Holding

Balance of convenience tilts in favour of the 1st respondent whose right to realise the security had crystallised

Reasoning

Since there was no evidence the applicant was meeting its obligations under the charge, and the statutory power of sale had crystallised, continuing the injunction would merely escalate the debt to the detriment of the respondent bank. The court therefore found the balance of convenience favoured the respondent.

p. 5

Legal principles established

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  • A chargor who offered the property as security cannot claim irreparable loss if it is sold to satisfy the debt, as that would defeat the purpose of the security

Court orders

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  1. 1.Dismissal of the applicant's notice of motion dated 26th September 2017
  2. 2.Costs of the application to the respondents

Authorities

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Legislation

  • Land ActSection 90
  • Land ActSection 96
  • Land ActSection 97
  • Land ActSection 104(2)
  • Auctioneers RulesSection 15(c)

Cases cited (5)

  • Giella V. Cassman Brown & Company Limited
    (1973) E.A 358
  • Patrick Karimi Wairagu t/a Thigi General Stores vs. Barclays Bank of Kenya Ltd & Another
    Nakuru HCCC No. 93 of 2011
  • Nyanza Fish Processors Ltd. V Barclays Bank of Kenya
    Civil Appeal No. 114 of 2009
  • Joseph OKoth Wando V National Bank of Kenya
    Civil Appeal No. 77 of 2004
  • Maithya V. Housing Finance Company of Kenya
    (2003) 1 E.A 133
Jurisdiction invoked
Original civil jurisdiction over the plaint and notice of motion seeking injunctive relief regarding the suit property; no constitutional/statutory provision expressly invoked

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Bantu Africa Resort Limited v I & M Bank Limited & another [2018] KEELC 4410 (KLR)", Case Analysis (2018). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/4410/eng@2018-02-19

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.